Alabama colleges can earn performance bonuses if lawmakers provide funding

Eligible colleges can earn bonuses by meeting or exceeding the goals for each performance category. Only the 15 named universities, including Tuskegee University, and community and technical colleges in the Alabama Community College System qualify. Implementation depends on lawmakers providing funding. Each college's total bonuses cannot exceed its assigned share. Colleges must provide accurate annual data and meet the law's other compliance and financial-reporting requirements. Faulty or manipulated data blocks bonuses for the affected category. The committee may also recommend smaller future funding shares. The law took effect June 1, 2026. The program is scheduled to begin with the fiscal year starting October 1, 2026, if lawmakers provide funding.

The law directs the college bonus program to replace existing performance funding programs. The Alabama Commission on Higher Education distributes most awards without an administrative fee. The replacement provision covers existing performance funding programs for eligible institutions, including the Alabama Community College System's program. Unspent money and interest stay in the fund for its stated purposes. Money for missed goals remains available for later awards to other eligible colleges. Lawmakers award designated research funding annually to public universities with more than $100 million in annual outside grants and contracts that certify growth every five years. The law expresses an intent that bonuses support student results. Research bonuses may also pay for research staff, facilities, equipment, and related costs. Money from the Act 2023-378 allocation for four-year colleges that was not committed on June 1, 2026, transfers to the bonus fund.

A committee of lawmakers and higher education leaders works with colleges to select performance measures and weights and publishes an annual report. Measures cover student results, workforce needs, research, and ways to help students finish. Reports show results and bonuses statewide and by college, including students needing extra support. Measures depend on available funding and must appear in the annual state education budget law. Meeting or exceeding a category's goal earns its full bonus. Missing the goal earns no bonus for that category. The committee must use workforce data to identify jobs with worker shortages and high wages every three years. The committee must establish a process to collect data on graduates' outcomes within one year of the law's June 1, 2026, effective date.